HOTELS.info
Small independent hotels you'll love staying in
 |
| ** ** |
*
*
| L'ANNUAIRE
iHi
DES
HOTELS INDEPENDANTS - 2012 |
Small hotels, OTAs and strategies for survival.Much has been said and written in the last months about a report, by Dr. Chris Anderson, of the Cornell University School of Hotel Administration, entitled "Search, OTAs and Online Booking: An Expanded Analysis." Anderson, a respected academic, concludes in his report that hotels that use the services of OTA's (online travel agencies) such as Expedia, Hotels.com and others, benefit heavily from this exposure in increased bookings and increased profitability. Maybe.... up to a point. But surprisingly for a report published by an eminent academic institution, Anderson's paper contains a number of serious methodological flaws. To suggest, on the basis of data obtained exclusively from online bookings at hotels of a large high-profile US chain, IHG (Intercontinental Hotels Group), that this policy is therefore good for all hotels, is stretching a point. Furthermore, Anderson largely fails to take account of a number of major considerations that ought to seriously affect any conclusions that can be drawn from this report. These are, notably: a) Large
upscale chain hotels have a history of working with travel agencies,
and paying hefty commission on their sales - which is often not at all
the case with smaller independent hotels.
b) If large groups such as IHG were to stop using Expedia and other portals overnight, customers would still reach their websites and book their rooms, because they have a brand that is sought after, and a good Internet presence in their own right. So far from losing out by not using OTAs, they might actually gain, as they would no longer pay commission of 15% - 25 % to these OTAs on sales booked through their sites. c) While OTAs boost occupancy rates for the hotels that use them - there can be no doubt of this - they only marginally increase the size of the total cake that is being cut up. In other words, by boosting sales to one group of hotels (those that use their services), they are taking business away from others - those that do not use their services. That is a good argument for using the services of OTAs, just as long as only some hotels use their services. But if all hotels used their services, the playing field would be levelled again, and no hotels would benefit.... apart from by paying even greater commissions to feature higher in the OTA listings. OTAs and small hotels Small independent hotels do not have the brand visibility of large chains, so even if "billboard" exposure of their name on Expedia and other portals does lead to increased sales, it almost certainly does not improve these hotels' direct Internet presence, and does not therefore bring them the extra direct sales that large groups like IHG get, ( according to Anderson.). All they get is the extra sales made through the OTA's online booking portal, on which they will be paying a commission of at least 15%, often more. The dilemma for small hotels Is it worthwhile for small hotels to advertise on OTAs, and thus pay an agency commission on perhaps the majority of room sales they make? The answer to this depends on the hotel's individual situation, its overall profitability, and the alternatives available in its case. If we look at an area where hotel capacity is inadequate to cope with tourism flows in busy periods - let's take the Scottish Highlands - it is clear that OTAs bring in the visitors. Scottish Highland Hotels listing with OTAs are often booked up weeks if not months in advance, whereas those that do not use the services of OTAs fill up more slowly. On the other hand, they don't pay 15% or 20% commission on sales, so their profit margin on each room sale may be 50% greater. So is it worth it? Hoteliers must bear in mind that commission is paid on the cost of the room, not on the profit margin. A £100 room night will cost at least £20 to service: laundry, toiletries, cleaning, wear and tear. Commission at 20% on £100 is £20: Profit before commission: £80... meaning that a room sale achieved through an OTA is actually taking at least a quarter of total profit margin, maybe more.. If the hotel is quite profitable, and also receives a good number of direct bookings on which commission is not paid, then paying the OTA commission on some rooms may effectively be a way of boosing occupancy rates and even boosting overall operating margins. On the other hand, if the hotel uses the services of an OTA simply to bring in its essential business and not lose custom to other more Internet-visible establishments, and even worse, if, to boost sales, it also slashes online room rates, then the situation may become critical. Hundreds of small independent hotels are driven out of business each year, because they can't afford the cost of competing with their rivals. Towards a solution Small hotels are not condemned to lose a large proportion of their profit margin to the massive international corporations that run the large OTAs; there are alternatives. And the essential element of any alternative solution is that it does not involve the payment of commission, but is based on fixed fees or no fees. The first thing that any independent hotel must do, in order to compete with the OTAs and large hotel groups on equal terms, is to offer online booking on their website. There are dozens of software solutions available for small hotels – just google on "hotel booking engines" or something similar. Some charge a one-time fee for the purchase of the software, and setting it up, others charge a flat-rate booking fee, others take a small commission: but they are all more economical than paying a hefty commission to OTAs. iHi does not recommend any particular booking engine, as we have not tried them out. The second thing to do is to ensure a good Internet visibility for your hotel. This is not so easy if your location is "London", but easier if it is "Banbury", and easier still if it is "Little Froghampton".... at least, for people searching on the Internet for these places. An internet presence can be consolidated by listing a hotel with local directories, and visitor traffic can be generated as well by listing it with directories like Independent-Hotels.info which show up well on search engines, offer listings at reasonable rates, even free, and do not take any commission. The future of hotel booking is certainly online, and hopefully not only with commission-based portals. But that depends on hotel owners; if they continue to rush headlong into the arms - or jaws - of large OTAs, in the belief that this is the only way to boost bookings, then they are playing the OTAs' game; it's a high-cost strategy. If they look around on the Internet for other low-cost alternatives, and help these to grow, then they are doing themselves a favour in the long run. November 2012 Travellers: Recommend a good and calm independent hotel in France, Spain, Italy or the UK. If you run or have stayed in a small independent hotel that you think ought to be in this directory, contact iHi with details. Hoteliers, hotel owners How much are you losing in commission paid to online booking hotel booking portals? A small hotel with an theoretical annual turnover on room sales of 200,000 €uros can easily lose 20,000 € in commission. Some of this can be avoided by listing a hotel free of charge with iHi, just as long as it meets our criteria. Send us a short objective description of your hotel (no hype) and a small photo too if you want. As long as your submission is approved, all you need to do in order to be listed with iHi is to provide a short link back to iHi from your hotel website. We'll provide further details when we have approved your proposal. iHi offers alternative solutions for hotels that cannot or do not want to link back. Criteria for listing with iHi : iHi is a website specialising in small friendly hotels in a quiet environment, offering good value to travellers. Good value hotels are not necessarily cheap hotels; they are hotels where prices are not above average for hotels of their category. Maximum size: 40 rooms - slightly larger for city hotels. No chains. Only independent establishments. Affiliation to a referral chain (Logis de France, Inter Hotels) is no problem. To submit a hotel to iHi, send details by email to ihi @ independent-hotels.info (Anti-spam measure : Remove blank spaces from this email address )
|
||||||